Knowing Where Your Charitable Contributions Go

In this season of giving, many people make charitable gifts. To ensure that your charitable contribution is as meaningful as possible, it’s important to know where your contribution actually goes.

In most cases, only a portion of your gift will go to the actual intended recipients or charitable purposes. All organizations have overhead and operating expenses, so it should come as no surprise that a portion of your donation goes towards these costs. What you may find alarming is the percentage of donations that go to these costs.

Gerri Willis of CNN urges donors to ensure that they only contribute to charities that use at least 75% of their budgets for their stated mission. The Better Business Bureau uses 65% as its standard when reviewing charities.

Some charities that claim to support Veterans were in the news recently when it was discovered that they give less than a third of their donations to charity.

In other cases, retailers may urge you to purchase items for which a portion of the sale goes to charity. This common practice has also faced increased scrutiny. The problem here is that it’s rarely disclosed what percentage of the sale will go to the charity. In some instances, the supported charities aren’t even aware they are part of these marketing campaigns.

Wherever you make contributions, you should have basic visibility into how the funds are being used. While you won’t necessarily get a detailed accounting of how your individual charitable contributions are used, we at Lending Club remind you that you should at least know the percentage of your donation that will actually be applied to the charitable cause. If you can’t easily determine this number from the provided literature, then your donation would likely be put to better use at an alternate charity.

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